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Comparing the Two Versions of the Tax Cuts and Jobs Act Headed to Conference

The House and Senate have each passed their own version of the Tax Cuts and Jobs Act, and lawmakers from each chamber will have to iron out the differences between the two bills in a conference committee. We've updated our comparison of how the two bills would change major provisions in the tax code and where their gross costs and savings come from. While the two bills are overall quite similar in both design and fiscal impact, there are several substantive differences conferees will have to reconcile.

Table 1 breaks down the major policy differences between the House- and Senate-passed bills. The most notable difference is that the Senate bill sunsets nearly all of its individual provisions and more of its business changes than the House version in order to comply with the Byrd rule's requirement that legislation passed through reconciliation not increase deficits beyond the ten-year budget window. Other noticeable differences include the House version's more aggressive base-broadening on the individual side and the Senate bill's repeal of the individual mandate and retention of the individual and corporate Alternative Minimum Tax.

Table 1: Major Differences in the House and Senate Versions of the Tax Cuts and Jobs Act

Area

House Version

Senate Version

Individual Tax

Tax Rates

12% | 25% | 35% | 39.6%

10% | 12% | 22% | 24% |32% | 35% | 38.5%

Standard Deduction

$12,200 (single) / $24,400 (married) / $18,300 (head of household)

$12,000 (single) / $24,000 (married) / $18,000 (head of household)

Personal Exemptions

Replaced with $300 credit per person through 2022; eliminated without replacement after

Eliminated

Child Tax Credit and Dependent Exemptions

Dependent exemption replaced with $300 credit through 2022; CTC increased to $1,600/child – phased out at higher income than current law

Dependent exemption eliminated; CTC increased to $2,000/child – phased out at higher income than House bill; separate $500 nonrefundable credit for non-child dependents

Alternative Minimum Tax

Eliminated

Exemption amount increased

Earned Income Tax Credit

Same as current law but with program integrity measures

Same as current law

Mortgage Interest Deduction

Limit lowered to $500,000 of debt for new mortgages on primary residences

Mostly retained; $100,000 home equity interest deduction eliminated

Charitable Deduction

Mostly similar to current law

Mostly similar to current law

Health Exclusion

Same as current law

Same as current law

State & Local Tax Deduction

Eliminated for income and sales taxes; limited to $10,000 for property taxes

Eliminated for income and sales taxes; limited to $10,000 for property taxes

Despite a few noticeable policy differences, the two bills are similar in terms of their overall fiscal impact; each carry an official cost of more than $1.4 trillion over the next ten years, though the cost of the Senate version is slightly higher than that of the House bill after accounting for the gimmicks in the two bills. The Joint Committee on Taxation has not dynamically scored the House bill, but it estimated a previous version of the Senate bill would generate about $400 billion in net dynamic feedback.

Table 2 compares how much each of the provisions in each plan costs or saves. On net, the House-passed bill contains about $1.1 trillion in business tax cuts, $200 billion in individual tax cuts, and $151 billion from eventually repealing the estate tax. The Senate-passed bill, meanwhile, includes around $910 billion in net individual tax cuts, $770 billion in net business tax cuts, $83 billion in estate tax cuts; and $318 billion in savings from setting the individual mandate penalty to $0. When comparing individual provisions, it is important to keep in mind that the Senate sunsets most changes after 2025 while the House bill makes most of them permanent.

Table 2: 10-Year Costs or Savings (-) in the House and Senate Tax Cuts and Jobs Act by Provision

Policy

House

Senate

Individual Tax Cuts

Reduce and/or consolidate individual income tax rates

$1.1 trillion

$1.2 trillion*

Roughly double the standard deduction

$921 billion

$737 billion*

Repeal or modify the Alternative Minimum Tax (AMT)

$696 billion

$636 billion*

Increase the child tax credit and/or create dependent tax credit

$641 billion*

$580 billion*

Other tax cuts

$0 billion

$12 billion*

Subtotal, Individual Tax Cuts

$3.3 trillion

$3.1 trillion

Individual Tax Increases

Repeal personal exemptions

-$1.6 trillion

-$1.2 trillion*

Reform itemized deductions

-$1.3 trillion

-$829 trillion*

Use chained CPI to index tax provisions

-$128 billion

-$134 billion

Reform higher education tax benefits

-$65 billion

N/A

Require Social Security number to obtain child tax credit and other changes

-$42 billion

-$24 billion*

Eliminate certain exclusions

-$36 billion

-$6 billion*

Other provisions

-$15 billion

-$8 billion*

Subtotal, Individual Tax Increases

-$3.1 trillion

-$2.2 trillion

Business Tax Cuts

Reduce corporate tax rate to 20% and repeal corporate AMT

$1.5 trillion

$1.3 trillion^

Reduce taxes for pass-through businesses

$597 billion

$477 billion*

Move to territorial system for foreign taxation

$207 billion

$216 billion

Reform taxation of intangible property

N/A

$99 billion

Increase small business write-offs

$41 billion*

$52 billion

Move to full expensing of investments for five years*

$25 billion*

$108 billion*

Other provisions

$29 billion

$42 billion

Subtotal, Business Tax Cuts

$2.4 trillion

$2.3 trillion

Business Tax Increases

Reduce limit on interest expense deductions

-$172 billion

-$307 billion

Enact base erosion or other revenue-raising provisions for foreign taxation

This blog was corrected after publication to reflect the final Senate bill's individual rates. The original version included rates from an earlier version of the bill. The grouping of certain provisions in Table 2 was also changed modestly, though the totals remain the same.